Chicago developer Sterling Bay is looking to sell an almost fully leased building in the city’s Fulton Market district in a deal that could provide a road map for 2026 pricing on new, well-located office properties.
Sterling Bay has hired JLL brokers to seek buyers for the 11-story boutique office building at 345 N. Morgan St., according to a brochure.
It is a relatively rare example of owners of high-quality, recently completed office buildings in Chicago and other major cities hitting the for-sale market.
Since the onset of COVID-19 in early 2020, the investment sales market has been dominated by properties in financial distress or pending loan maturities — or both.
The result has been a steady flow of sales at steep discounts to pre-pandemic values, often also at pricing well below the value of the property’s debt.
Sterling Bay’s offer does come with a pending loan maturity, but without other indications of distress, so pricing could foretell how much values of high-quality might recover in the years to come.
Launched in 2021, the project was backed by a construction loan of just under $70 million from Bank OZK. The loan has been amended multiple times, most recently in 2024 as the loan was set to mature, according to Cook County property records. The last amendment extended the loan maturity date until this August.
“We are thrilled to launch the sale of 345 N. Morgan, a premier Fulton Market asset that reflects Sterling Bay’s successful execution of our vision, highlighted by its impressive 94% leased status,” a Sterling Bay spokesperson said in a statement to CoStar News. “With strong market demand for high-quality, amenity-rich space in Chicago’s hottest submarket, now is an ideal time to bring this asset to opportunistic investors.”
The offering comes soon after Colorado-based investor Real Capital Solutions paid $131.5 million for the 35-story office tower at 401 N. Michigan Ave. That was the highest-priced office sale in Chicago since 2022, when a sale of the controlling interest in Bank of America Tower valued the trophy building at 110 N. Wacker Drive at more than $1 billion.
People familiar with the building at 345 N. Morgan say it is likely to attract higher bids than seen in recent years because of the building’s recent completion in 2022, the high-demand area it is in and the relatively small overall deal size that will expand the potential pool of buyers.
The 197,433-square-foot building is about 94% leased, with a weighted average lease term of almost 11 years, according to the JLL materials.
The largest tenant is supply-chain management firm Havi, which leases 96,423 square feet. That company is a vendor for McDonald’s, the fast-food giant that has its global headquarters in the neighborhood.
Sterling Bay was a major force in the redevelopment of the neighborhood, a former meatpacking district, which in recent years emerged as the fastest-growing urban office market in the country.
The Chicago developer built McDonald’s headquarters from the ground up and landed Google’s Midwest headquarters in the former Fulton Market Cold Storage building.
In recent years, after Sterling Bay’s Lincoln Yards megadevelopment on the North Side stalled, the firm has been selling off properties in Fulton Market and in the Lincoln Yards area.
Last year, Sterling Bay sold an adjacent multifamily development site at 350 N. Morgan for $18 million.
Separate developers recently took over the north and south portions of Lincoln Yards, leaving Sterling Bay no longer involved in what had been one of the most ambitious developments ever attempted in Chicago.
For the record
Sterling Bay is represented in the sale by JLL brokers Jaime Fink, Bruce Miller, Sam DiFrancesca and John Mason.